Fair Isaac buys UK's Dash Optimization; reports Q1 profit fall

The move augments Fair Isaac's decision management solutions, which automate, improve and connect decisions to enhance business performance.

Fair Isaac's acquisition of Dash builds upon a longstanding partnership between the two firms. Dash optimization technology is currently embedded in Fair Isaac's Decision Optimizer, a software tool for achieving the smartest decision strategies given operational complexities, resource constraints and market uncertainties.

"Demand for sophisticated decision management tools is growing rapidly, and the addition of Dash optimization technology to our portfolio helps us to remain the market leader," said Mark Greene, CEO of Fair Isaac. "With their optimization capabilities and our own business rules management and predictive analytic solutions, Fair Isaac now has the industry's most comprehensive decision management suite."

Optimization is used in asset management, operations, and logistics/supply-chain domains to help businesses boost operational efficiency, maximize revenue, and reduce costs. Dash's optimization solutions are used in the financial services, insurance, retail, and manufacturing/processing industries. For example, a leading global bank uses Xpress-MP for portfolio optimization and matching, enabling it to cross-sell advisory services profitably to a wide range of investors, including those with smaller portfolios.

"We are delighted that Fair Isaac has acquired Dash and the Xpress-MP product suite," said Bob Daniel, managing director and co-founder of Dash Optimization. "Fair Isaac's backing and coverage will enable the Xpress-MP team to accelerate its product development, maintaining and enhancing Xpress-MP's preeminent position in large-scale optimization."

Separately, Fair Isaac Corporation (NYSE:FIC), the leading provider of analytics and decision technology, today announced the financial results for its first quarter ended December 31, 2007.

First Quarter Fiscal 2008 Results

The company reported first quarter revenues of $199.4 million in fiscal 2008 versus $208.2 million reported in the prior year period. Net income for the first quarter of fiscal 2008 totaled $20.2 million, or $0.39 per diluted share, versus $31.2 million, or $0.52 per diluted share, reported in the prior year period.

First Quarter Fiscal 2008 Revenues Highlights

Revenues for first quarter fiscal 2008 across each of the company's four operating segments were as follows:

• Strategy Machine Solutions revenues were $105.6 million in the first quarter compared to $109.8 million in the prior year quarter, or a decrease of 3.8%, primarily due to the divestiture of the mortgage product line in the second quarter of fiscal 2007 and a decline associated with insurance solutions, marketing solutions and customer management products, partially offset by an increase in revenues derived from collections and recovery, fraud and consumer products.
• Scoring Solutions revenues were $42.7 million in the first quarter compared to $44.9 million in the prior year quarter, or a decrease of 4.9%, primarily due to a decrease in revenues derived from our PreScore Service.
• Professional Services revenues were $37.1 million in the first quarter compared to $39.3 million in the prior year quarter, or a decrease of 5.6%, primarily due to a decline associated with fraud, and customized analytic implementation services, partially offset by an increase in revenues derived from customer management and marketing solutions services.
• Analytic Software Tools revenues decreased to $13.9 million in the first quarter compared to $14.2 million in the prior year quarter, or by 2.0%, due to a decline in revenues generated from the sale of tool products.

Bookings Highlights

The bookings for the first quarter were $102.4 million compared to $72.1 million in the same period last year. The company defines a "new booking" as estimated future contractual revenues, including agreements with perpetual, multi-year and annual terms. Management regards the volume of new bookings achieved as one indicator of future revenues, but they are not comparable to, nor should they be substituted for, an analysis of the company's revenues.

Balance Sheet and Cash Flow Highlights

Cash and cash equivalents, and investments were $238.6 million at December 31, 2007, as compared to $246.8 million at September 30, 2007. Significant changes in cash and cash equivalents from September 30, 2007 include cash provided by operations of $48.0 million, borrowings under the revolving credit facility of $20.0 million, and $13.2 million received from the exercise of stock options and stock issued under an employee stock purchase plan. Cash used during the first quarter includes $7.4 million related to purchases of property and equipment and $82.4 million to repurchase common stock.

Acquisition of Dash Optimization Limited

The company also announced today that it has acquired Dash Optimization ("Dash"), the leading software provider of optimization, for $32 million. Dash's optimization technology complements our vision to "be the leader in decision management" and our mission to "help businesses make smarter decisions." Dash develops and markets Xpress-MP, the world's leading software product for modeling and optimization. Xpress-MP solves large-scale optimization problems and enables better business decisions and resulting financial benefits.

We intend to integrate this technology into our Decision Middleware business offering the market-leading solution in business rule management systems, optimization software components and predictive analytics. Dash is completely focused on optimization and works in close partnership with its customers and OEM partners. Dash has offices in the United Kingdom, Germany, the United States and Japan with distribution partners in Europe and the Far East.

Outlook

The company expects revenues for second quarter fiscal 2008 to be approximately $205.0 million and earnings per diluted share to be approximately $0.44. The company expects revenues for fiscal 2008 to be approximately $825.0 to $835.0 million and earnings per diluted share to be approximately $1.80 to $1.90.

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